Correlation Between Opthea and Lumos Pharma
Can any of the company-specific risk be diversified away by investing in both Opthea and Lumos Pharma at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Opthea and Lumos Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Opthea and Lumos Pharma, you can compare the effects of market volatilities on Opthea and Lumos Pharma and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Opthea with a short position of Lumos Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Opthea and Lumos Pharma.
Diversification Opportunities for Opthea and Lumos Pharma
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Opthea and Lumos is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Opthea and Lumos Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumos Pharma and Opthea is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Opthea are associated (or correlated) with Lumos Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumos Pharma has no effect on the direction of Opthea i.e., Opthea and Lumos Pharma go up and down completely randomly.
Pair Corralation between Opthea and Lumos Pharma
Considering the 90-day investment horizon Opthea is expected to under-perform the Lumos Pharma. In addition to that, Opthea is 5.73 times more volatile than Lumos Pharma. It trades about -0.12 of its total potential returns per unit of risk. Lumos Pharma is currently generating about -0.05 per unit of volatility. If you would invest 442.00 in Lumos Pharma on September 4, 2024 and sell it today you would lose (4.00) from holding Lumos Pharma or give up 0.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Opthea vs. Lumos Pharma
Performance |
| Timeline |
| Opthea |
| Lumos Pharma |
Opthea and Lumos Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Opthea and Lumos Pharma
The main advantage of trading using opposite Opthea and Lumos Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Opthea position performs unexpectedly, Lumos Pharma can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lumos Pharma will offset losses from the drop in Lumos Pharma's long position.| Opthea vs. Molecular Partners AG | Opthea vs. MediciNova | Opthea vs. Anebulo Pharmaceuticals | Opthea vs. Champions Oncology |
| Lumos Pharma vs. Candel Therapeutics | Lumos Pharma vs. Cingulate Warrants | Lumos Pharma vs. Unicycive Therapeutics | Lumos Pharma vs. Cardio Diagnostics Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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